Zomato is set to infuse INR 300 crore of fresh capital into its quick commerce venture, Blinkit, as per a regulatory filing submitted to the Registrar of Companies (RoC).
With this recent investment included, Zomato has now injected a total of INR 2,300 crore into Blinkit since acquiring the company in August 2022, according to the filings. Zomato had acquired Blinkit, previously known as Grofers, in an all-stock transaction valued at INR 4,477 crore.
Apart from Blinkit, Zomato plans to inject INR 100 crore into its subsidiary Zomato Entertainment Pvt Ltd, which oversees the company’s live events and ticketing operations.
This comes at a time when competition in the quick commerce space is intensifying, with Blinkit facing off against contenders like Swiggy Instamart and Zepto.
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Competition Dynamics in the Quick Commerce Sector
As Swiggy, a competitor of Zomato in food delivery and dining out, progresses with draft papers for its INR 10,414-crore IPO filing with the markets regulator, Zepto is engaged in talks to secure funding of $300 million (approximately INR 2,500 crore).
The quick delivery sector is anticipated to witness the participation of horizontal e-commerce giants like Flipkart. On April 19, it was reported that Flipkart had engaged in discussions with Zepto regarding a possible agreement, however, the negotiations ultimately did not materialize.
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Blinkit’s Financial Performance and Expansion Initiatives
During fiscal year 2024, Blinkit disclosed revenues totaling INR 2,302 crore, marking a significant increase from the INR 1,064 crore recorded in FY23, more than doubling its previous year’s figure.
The company has also seen an enhancement in its financial performance, with its adjusted EBITDA loss decreasing to INR 37 crore in the January-March 2024 quarter, down from INR 203 crore in the corresponding period of the previous year.
In its quarterly earnings report in May, Zomato revealed that Blinkit would embark on a significant expansion initiative, aiming to raise its dark store count to 1,000, up from 562 stores as of March 31.
The quick commerce platform is broadening its range of product categories, branching into segments such as apparel, home decor, consumer electronics, sports goods, and home appliances. These categories are typically associated with larger online marketplaces like Amazon and Flipkart.
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For Zomato, the quick commerce platform has emerged as a significant contributor to shareholder value compared to its traditional food delivery business. In April, it was reported that Blinkit’s contribution to Zomato’s overall market value had exceeded that of its food delivery arm, as noted by Goldman Sachs.
According to the April report, Blinkit’s implied value was estimated at INR 119 per share, surpassing the INR 98 per share valuation of Zomato’s food delivery segment. This translated to Blinkit contributing $13 billion to Zomato’s overall value, a significant increase from $2 billion in March 2023, as highlighted by Goldman Sachs.
Market Capitalization and Stock Performance
As of Tuesday morning, Zomato’s market capitalization exceeded $19 billion (approximately INR 1.6 lakh crore). The company’s stock was trading 0.4% higher than the previous day’s close at INR 182.50 during early trading on the BSE.
Before fully acquiring Blinkit in 2022, Zomato held a 9% stake in the company. In June 2021, the grocery delivery platform raised $120 million from Zomato and Tiger Global, achieving unicorn status. In March 2022, Blinkit secured $100 million from Zomato through convertible notes. Additionally, in the same month, Zomato provided a $150 million loan to the delivery startup it would later acquire.